Hon Hai denies joint bid with Western Digital for Toshiba Memory

Taipei--Taiwan-based manufacturing giant Hon Hai Precision Industry Co. (??) denied Saturday media reports that it will join forces with U.S. computer data storage supplier Western Digital Corp. to bid for memory chip assets of Japan's financially troubled Toshiba Corp.

In a statement, Hon Hai, which is eyeing Toshiba's Toshiba Memory, said that reports of such a joint bid with Western Digital was unfounded.

Toshiba Memory is being put up by Toshiba for sale to reduce losses in its nuclear power investments in the United States.

However, Tai Cheng-wu (???), president of Japan-based Sharp Corp., in which Hon Hai owns a 66 percent stake, said in a recent report posted by the Mainichi Newspapers that if Hon Hai wins the bid for the Toshiba chip assets, it was willing to allow Western Digital to hold a stake in Toshiba Memory for future cooperation.

In addition, Tai told Mainichi that Hon Hai was also willing to have Toshiba retain a 20 percent stake in Toshiba Memory in case of a successful bid for the assets if the Japanese firm hopes.

While Hon Hai denied it would work with Western Digital, its statement did not deny or confirm that it would allow Toshiba to retain a 20 percent stake in Toshiba Memory if it won the bid.

Since Western Digital jointly operates a chip plant in Yokkaichi, western Japan, with Toshiba, the U.S. firm has accused Toshiba of a serious breach of contract in the joint venture, due to the plans to sell Toshiba Memory.

Western Digital's accusation has created legal challenges which could complicate the plans to sell Toshiba Memory.

Hon Hai is one of several bidders for Toshiba Memory.

Its competitors in the bidding reportedly include a consortium organized by U.S. integrated circuit designer Broadcom Inc. and U.S. high-tech fund Silver Lake, a group formed by Western Digital and Japanese government-related investors.

Another competitor is reportedly a consortium formed by U.S. private equity fund Bain Capital with South Korea's memory chip maker SK Hynix Inc.

In an interview with the Nikkei Asian Review earlier this week, Hon Hai Chairman Terry Gou (???) said that Apple and Amazon would be joining his company's bid for the Toshiba semiconductor assets.

Toshiba will likely name a winner of the bidding after a board meeting on June 15.

Meanwhile, Hon Hai, an assembler of iPhones and iPads for Apple, reported on Friday that its consolidated sales for May stood at NT$279.85 billion (US$9.3 billion), down 13.3 percent from a month earlier and also down 5.27 percent from a year earlier.

Hon Hai's May sales dipped to a new low in 33 months with market analysts saying that the fall reflected slow season effects as well as the reduced number of working days in the month, during which there was the four-day Dragon Boat Festival holiday.

In May, shipments of Hon Hai's computing devices increased from a month earlier, while shipments of communications and consumer electronics gadgets declined month-on-month.

Analysts said that slow season effects are expected to continue into June before Apple unveils the next generation iPhones in September.

Hon Hai is expected to report a 5-7 percent sequential drop in sales for the second quarter, analysts added.

In the first five months of this year, Hon Hai's consolidated sales rose 0.23 percent from a year earlier to NT$1.58 trillion.

Source: Focus Taiwan News Channel